Perhaps that was a bit insensitive but there’s more to it than another company simply going belly up amidst an ongoing economic downturn. Atari may be a name we rarely think of anymore, a remnant of bygone era dominated by Pong and Asteroids but the company is quite firmly amongst the founding fathers of the video game industry.

The US branch of the company is looking to break away from its French parent company in an attempt to establish itself under another name and to secure independent capital for future growth.

According to a press release sent out by the company Atari Inc, Atari Interactive Inc, Humongous Inc and California US Holdings Inc collectively filed for Chapter 11 bankruptcy in New York. It goes on to state that the US operation seeks to break away and ”secure independent capital for future growth, primarily in the areas of digital and mobile games.”

Atari (formerly Infogrames) has struggled for years to generate any sort of profit amidst a long history of corporate changes and various game company acquisitions such as Accolade, GT Interactive, Hasbro Interactive (which owned the Microprose brands), Shiny Entertainment, and others.

In the last two years, Atari has been looking healthier with profits coming in thanks, primarily to the US operation which has been working on mobile games based on the company’s iconic brands. Reports suggest that Atari’s growth is hampered by its reliance on a London based financier, BlueBay Asset Management; a $ 28 million credit facility with that company lapsed on December 31st. This has left Atari unable to release games currently in development. Efforts to find new capital have been hampered by the odd structure of the company, which is essentially an American operation with a listing on the French stock market.

According to the press release, “The chapter 11 process constitutes the most strategic option for Atari’s US operations, as they look to preserve their inherent value and unlock revenue potential unrealized while under the control of Atari SA. During this period, the company expects to conduct its normal business operations.”

“The US companies are also seeking approval to obtain $ 5.25 million in debtor-in-possession financing from one or more funds managed by Tenor Capital Management, a firm specializing in convertible arbitrage and special situations. Each unit has filed a number of traditional “first-day” pleadings, which are intended to minimize any disruption of their day-to-day operations.”

The way I look at it, the US branch of Atari is being smart by jumping ship because the larger company is holding the US outfit back and by breaking away from it they can see far superior growth.